Multiple Park Avenue Towers Hit KBRA’s Watch Downgrade List

Kroll Bond Rating Agency (KBRA) recently added 12 commercial mortgage-backed securities (CMBS) single-borrower (SB) office transactions to its Watch Downgrade list “due to the potential impact of ongoing deterioration in the office sector amid weaker office fundamentals. Effective rents continue to remain under pressure with the generous concessions that many landlords are forced to offer to retain or attract tenants reaching over 25% as a share of lease term in Manhattan – representing a 67% increase of the just over 15% share in 2015. Among the list are 8 Manhattan trophy towers; and 280 Park Avenue tops the list with a $1.075 billion floating-rate loan maturing September 9, 2028. The other 7 Manhattan loans range from the $760 million loan encumbering the Olympic Tower at 645 Fifth Avenue to a low of $273.5 million loan at 51 Astor Place. All the underlying loans under watch have maturities between August 2024 and September 2028 “and are more susceptible to defaulting on loan payments and/or refinancing challenges if their sponsors do not infuse equity into the loans.”